Phoenix Region August Home Sales

Phoenix-area home sales fell sharply in August from July, reflecting the weak job market, financial uncertainty among buyers and a dwindling inventory of low-cost foreclosure properties to choose from. Last month’s median sale price hardly budged from July, given there was little change in either the portion of sales that were foreclosed properties or in the distribution of sales across price segments, a real estate information service reported.

In August, 57.2 percent of the Phoenix-area houses and condos that resold had been foreclosed on in the prior 12 months, down a hair from 57.8 percent in July and the lowest since such foreclosure resales were 54.7 percent of all resales last October. Foreclosure resales hit a high of 66.2 percent this March, according to MDA DataQuick, a San Diego-based firm that tracks real estate trends nationally via public property records.

A total of 8,639 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in August, down 15.5 percent from July but up 20.2 percent from a year ago. Total home sales have increased on a year-over-year basis for eight consecutive months. Last month’s sales were at the highest level for an August since 2006.

The relatively steep drop in sales between July and August was seen elsewhere in the West. In Phoenix, the average change in sales between July and August this decade is a decline of 0.5%, though none of the declines was as steep as this year’s.

August sales of existing (not new) Phoenix-area houses and condos combined rose on a year-over-year basis for the 14th consecutive month. Last month’s gains in the resale market offset a 49.7 percent annual decline in sales of newly constructed homes. The 866 new homes that builders sold last month marked the lowest new-home tally for an August in more than a decade.

The median price paid last month for all new and resale houses and condos combined was $134,712, up 1.3 percent from $133,000 in July but down 29.1 percent from $190,000 a year ago. The median has increased month-to-month for each of the past four months, rising from a decade low of $125,000 in April.

August’s $134,712 overall median stood 49.0 percent below the Phoenix area’s peak $264,100 median reached in June 2006. The median has fallen on a year-over-year basis for 31 consecutive months.

An alternative price gauge analysts watch has shown a flattening and upward trend in recent months: The median paid per square foot for existing single-family (detached) houses rose to $70 in August, up from $69 in July but still down 32.6 percent from a year ago and down 59.0 percent from a peak $171 in June 2006.

The Phoenix region’s inventory of foreclosed properties has been whittled substantially over the past year, mainly by first-time buyers and investors. Last month 45.5 percent of all Phoenix-area buyers used government-insured FHA loans, a popular choice among first-time buyers, according to an analysis of public property records. Absentee buyers made up 40.7 percent of all purchases – a relatively high percentage in the West. Absentee buyers are mainly investors and second-home buyers but could include any others who indicate at the time of sale that the property tax bill will go to a different address.

The use of adjustable-rate mortgages (“ARMs”) to buy homes dipped in August to 2.6 percent of all purchase loans, down from 3.1 percent in July but still up from a decade low of 1.4 percent in April this year. However, August’s purchase ARM level was down from 7.5 percent a year ago. The monthly average for ARM use over the past decade is 27.8 percent of purchase loans.

On the foreclosure front, August’s level of lender repossessions remained high by historical standards but fell sharply from July, as was the case across much of the West. Last month 4,412 houses and condos were lost to foreclosure in the two-county region, down 24.1 percent from July and down 3.2 percent from a year ago. It was the lowest monthly foreclosure total since 3,525 foreclosures in April this year. The figures are based on the number of trustees deeds filed with the county recorder’s office. The document signals that a home was lost to foreclosure.

Across the West, year-over-year declines in the median sale price - the point where half of the homes sold for more and half for less – have sometimes overstated the extent to which the value of the typical home has fallen. It’s because the median is being tugged lower not just by price depreciation but by shifts in the types of homes selling. For example, compared with past years more of today's sales involve foreclosures, which tend to sell at a discount and be concentrated in more affordable areas. Also, the August 2007 credit crunch made larger "jumbo" mortgages more expensive and harder to obtain, which has led to sluggish sales – in some cases the lowest in many years – in higher-priced neighborhoods. (A dropoff in high-end sales can pull down the median.)

Phoenix MSA

Number of sales	Aug-08	Aug-09	%Chng
Resale houses	4,955	6,949	40.20%
Resale condos	511	824	61.30%
New homes	1722	866	-49.70%
All homes	7,188	8,639	20.20%

Median sale price	Aug-08	Aug-09	%Chng
Resale houses	$186,000	$129,950	-30.10%
Resale condos	$155,500	$105,000	-32.50%
New homes	$205,000	$185,866	-9.30%
All homes	$190,000	$134,712	-29.10%